Obama’s Budget Cuts Millions From Financial Regulatory Agency
Jerry Epstein: President Obama’s budget would slash the Commodity Futures Trade Commission budget to about $200 million, which will make regulating the $400 trillion derivatives market even more challenging
JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore. And welcome to this edition of The Epstein Report.
Now joining us is Gerry Epstein. Gerry is codirector of the Political Economy Research Institute, also known as PERI, at UMass Amherst.
Thanks for joining us, Gerry.
PROF. GERALD EPSTEIN, PERI, UMASS AMHERST: Thanks, Jessica.
DESVARIEUX: So, Gerry, President Obama’s budget has been all over the news this week. What are some of your takeaways?
EPSTEIN: Well, some progressives are saying that this is a great new budget that really changes the conversation on Capitol Hill. And in some ways that is true. There are some very good things proposed in this budget, including an expansion of the earned income tax credit to low-wage workers who don’t have children, and including more investment in pre-K education–that’s also very good.
But there are some troubling things about the budget which we shouldn’t lose sight of. One is that it continues big increases in the defense budget. Of course, Obama has ended and is supposedly winding down two wars. We should in this kind of environment see a decline in defense spending and military spending. But instead this budget has increases in defense spending built right into it. So that’s one disturbing thing.
A second is what it says about Obama’s commitment to the Dodd-Frank financial regulation act. As you probably know, one of the big achievements of the Dodd-Frank law was to bring derivatives under regulatory purview for the first time, these weapons of mass destruction that contributed to the financial crisis. The Commodity Futures Trading Commission was tasked with overseeing this $400 trillion market, a vast expansion of its responsibilities. But in this budget, President Obama calls for a decline in the budget request that he had last year. Last year he asked for $315 million for the CFTC. The Congress only gave $215 million for this year. But instead of asking again for $315 million or even more, Obama is only asking for $280 million in his budget. And this has a lot of people outraged about why are you trying to cut this very important regulatory agency at a time when its necessary demands have increased three or fourfold.
DESVARIEUX: And, Gerry, if I understand correctly, the CFTC has actually made some progress and has recuperated about $2 billion in penalties. And as you mentioned, their budget is only somewhere in the realm of $200 million. So couldn’t there be a system where you could maybe peg how much in penalties that they recuperate, like, a percentage of it that goes to budget? I just don’t–and sort of reward the good behavior of some of these investigators doing their job?
EPSTEIN: Yeah, absolutely. I think there certainly could be a mechanism like that, where a certain percentage of the rewards go to finance the budget of the CFTC. Also, they could tax the institutions, put a small fee on the institutions that they’re regulating. The other financial regulators do that.
So there’s plenty of money around. This is, you know, chump change. And it just suggests that the Wall Street lobbyists have had quite a bit of success in getting to the Obama administration to try to hamstring and block the efforts of these financial regulators, especially the CFTC. This is going to make it impossible for them to carry out one of the major successes of the Dodd-Frank Act itself.
DESVARIEUX: Alright. Gerry Epstein, thank you so much for joining us.
EPSTEIN: Thank you.
DESVARIEUX: You can follow us on Twitter @therealnews. Please send me questions or comments @Jessica_Reports.
Thank you for joining us on The Real News Network.
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